General Election 2010: Conservatives to give four million married couples a tax break

Four million married couples are to be offered tax breaks worth up to £150 a
year under Tory proposals to be unveiled by David Cameron.

The Tory proposal to give four million married couples tax breaks has been described as "fundamental to David Cameron's philosophy for mending a broken society"Photo: GETTY IMAGES

By Andrew Porter and Robert Winnett

10:10PM BST 09 Apr 2010

Wives or husbands who do not work will be able to transfer part of their tax-free allowance to their spouse — if their partner’s income does not exceed £44,000.

In total, the tax break – which Mr Cameron hopes will emulate the success of the party’s plan to reverse Labour’s National Insurance rise — would be worth up to £150 a year for low and middle-income families, the Tories claim.

The partial reintroduction of the “married couple’s allowance” if the Tories win the General Election is intended to help women who give up work to look after their children.

It also likely that it would be welcomed by many retired couples where only one person has a pension or other type of income.

The break would not be available to higher-rate taxpayers. It is estimated that it would benefit about four million of Britain’s 12.3 million married couples.

The policy, to be introduced in April next year if the Conservatives win the election, would cost an estimated £550 million.

It would be funded by a levy on Britain’s banks designed to raise £1 billion. The remaining funds would be used to pay government debts. A senior Conservative source said last night: “We are honouring one of David Cameron’s main commitments. It is a very progressive and fair tax.

“We are confident that it is the right policy. We think it is a good strong announcement that reinforces our message that society matters to the Conservatives.”

The shift of focus to family issues in the election campaign came after another day dominated by debate about economic management.

The tax break for married couples will form the centrepiece of the Conservatives’ manifesto, to be unveiled next week, probably on Tuesday.

Senior religious figures, charities and parenting groups are expected to endorse the policy.

Organisations including the Church of England, Saga and the Mothers’ Union have told The Daily Telegraph that they believed marriage should be explicitly recognised in the tax system.

Last night, Lord Carey of Clifton, the former Archbishop of Canterbury, said: “The recognition of marriage in the tax system is a long overdue restatement of the centrality of this institution to the common good of our society.

“Ironically, it was the Conservative Party which weakened the married persons’ tax allowance, it’s entirely appropriate that this party should now atone for that failure.”

Saga, the financial services and holiday group for the over-50s, said: “The Saga Generation generally believes that families are core to a balanced society.

“We do need a fairer society in which the tax and benefit system does not penalise people when they marry.”

Reg Bailey, chief executive of the Mothers’ Union, said: “We believe that marriage should be supported within the tax system. While the income boost may seem small to many, to couples or families living on a low income the fiscal boost could be significant.”

Jeremy Hunt, the Tory culture spokesman and one of David Cameron’s closest front-bench colleagues said of the marriage policy:

“[It is] fundamental to David Cameron’s philosophy for mending a broken society. David’s view is that it’s the right thing to do.”

After business leaders backed the Tory policy on National Insurance, Mr Cameron is planning to seek independent endorsement for his marriage tax break policy. Labour ministers are expected to line up critics of the policy.

Last night, Justine Roberts, the co-founder of Mumsnet, said: “We’ve seen a lot of comments of people who say 'I want to vote Tory but I don’t believe I’m in the type of family they are supportive of because I’m a lone parent’. People would like to see support for all types of families.”

Specific tax breaks for married couples were scrapped in 1999. At that time, they were worth up to £197 per couple. Under the Tory proposals, someone not working would be able to transfer up to £750 of their tax-free allowance to their married partner. The break would also be available to homosexuals in a civil partnership.

A spouse who was working would be able to save up to £150 in tax.

For example, someone earning £30,000 a year currently receives a tax-free allowance of £6,475. They therefore pay tax on £23,525 of their income. Under the proposals, their non-working spouse would be able to transfer part of their tax-free allowance. Therefore, the working partner would only pay tax on £22,775 of their income, a tax saving of £150.

Anyone earning up to £42,500 would be able to benefit in full from the policy.

The allowance would then be “tapered” away so that nobody earning more than £44,000 would benefit.